Saudi Cargo sees flat 2013

Monday, December 10, 2012

Saudi Airlines Cargo experienced growth among its 13 freighters in 2012, seeing a 19-percent increase in activity in boarding figures for the first nine months of the year when compared to 2011’s figures.
Revenue was up during that same time period by 22 percent. But Peter Scholten, vice president of commercial at Saudi Cargo, anticipates little growth from these numbers next year. He's gearing up for the carrier’s freighter capacity to stay level next year and for 2013 to seem like a mirror image to 2012’s air cargo activity.
“The global cargo market is currently under pressure due to over capacity, and we are witnessing a growth in belly capacity within a declining overall market,” he told American Shipper. “Nevertheless, we continue to operate freighters on routes for which there is sufficient demand for capacity.”
In November, Singapore Airlines Cargo announced it would park one of its 13 freighters next year due to overcapacity in Asia.
Scholten said he does see tight capacity on the Far East-Europe route next year and added the carrier will adapt its capacity on that lane according to demand. Even with the minor capacity crunch on this lane, he said forwarders and shippers will have more than enough cargo options to choose from next year, whatever the lane.
“I do not think that these adjustments will affect freight forwarders, in particular, as there will be sufficient cargo capacity for them to handle, whether it be belly capacity or freighter capacity,” he said. “Of course, there will be some lanes where there is less capacity than demand and vice versa, but there will still be enough cargo capacity, overall, for freight forwarders.”
A stagnating market rife with overcapacity and downward pressure on rates are characteristic of next year’s outlook. Only belly cargo capacity, he said, will show any growth.
“Pressure on rates means that only specific niche routes will warrant higher prices based on market demand,” Scholten said. “If the European and U.S. markets make a recovery, it is possible that we will see an adjustment in volume and capacity accompanied by more sustainable rates.” - Jon Ross